U.S. Agencies Calls For Delay, Review Of Purchase Of Bluesky American Samoa

Take-over by Fijian company to receive standard scrutiny by Federal Communications Commission

By Fili Sagapolutele

PAGO PAGO, American Samoa (The Samoa News, March 21, 2017) – A U.S government attorney for two federal agencies has requested that the U.S Federal Communications Commission (FCC) “defer” action, while their review is ongoing on the application by Fiji based Amalgamated Telecom Holdings Limited (ATH) to acquire Bluesky assets in American Samoa, according to FCC documents, which also shows that once the acquisition is completed, a new US holding company or — ‘U.S. HoldCo’ — will be formed to take over Bluesky’s local assets.

Off island industry sources told Samoa News last Friday that these types of reviews by the federal government are standard and also required on these types of acquisitions — especially when it involves a foreign corporation. Additionally, such reviews take time.

US Justice Department’s National Security Division attorney Kristin A. Taylor, in a Feb. 10 letter, tells FCC that the USDOJ, with the concurrence of the U.S Department of Homeland Security, requests that FCC “defer action” dealing with AST Telecom LLC — dba Bluesky.

The two departments “currently are reviewing this matter for any national security, law enforcement, and public safety issues, but have not yet completed that effort,” Taylor wrote. She also says that the departments will notify the FCC of the completion of their review and, based on the results of such review, will then request appropriate action by the FCC, which will be advised “promptly upon completion of our review.”

In a Jan. 30 seven-page public notice, the FCC sought public comments on the “applications filed for the transfer of control” of AST Telecom, American Samoa Hawaii Cable LLC (ASH-Cable), and Samoa American Samoa (SAS) LLC, from Spain-based Amper S.A. to ATH and requested a declaratory rule on foreign ownership.

(ASH-Cable is 33% owned by the American Samoa Government and the Lolo Administration is keeping a close watch on this acquisition, with the Attorney General’s Office taking the lead for ASG.)

According to the notice, comments were to be filed on or before Mar. 1 and reply comments on or before Mar. 16. FCC’s media relation office in Washington D.C. didn’t immediately reply to Samoa News’ emailed questions, which included questions about the number of many comments received — supportive and opposed — so far; and when FCC plans to render a decision on the applications.

It’s unclear at this point whether the FCC would make public any public comments submitted. An online search of FCC records, up to yesterday afternoon didn’t identify any public comments available.

When ATH announced last August its acquisition of local Bluesky, the company made clear that the acquisition would require regulatory approval — for example the FCC. Samoa News should point out that American Samoa does not have a Utilities Commission, with the governor of American Samoa serving as “Utilities Commissioner” in its place. His approval is therefore also needed.

According to the public notice, the applicants claim that control by ATH will provide AST with access to capital resources needed to upgrade networks and offer innovative services. Additionally, the “proposed transaction will be seamless and transparent to customers in American Samoa as AST, ASH Cable, and SAS Cable will continue to provide services in the normal course without interruption at the same rates, terms and conditions that existed before the transaction.”

The applications further state that the proposed transaction will enhance competition in American Samoa as it will create a stronger competitor. Applicants also assert that any competition concerns raised by the AST post-transaction affiliations with foreign carriers will be addressed through dominant carrier regulations on the relevant routes.

Besides a “series of applications” filed by ATH and Amper, there was also a “petition for declaratory ruling” filed Dec. 20, 2016 from ATH — represented by Ivan Fong, the company’s general manager and secretary, and AST Telecom — represented by Douglas Creevey, who is identified in the 11-page petition as chief executive officer with Bluesky’s American Samoa address.

The petition requests a declaratory ruling, that indirect investment of 100% in AST by ATH is consistent with the public interest standard in accordance with federal law; additionally, that AST is indirectly owned by Amper. Furthermore, Amper and its affiliates and ATH have entered into a purchase agreement pursuant to acquire control of AST and its affiliates in American Samoa, the Cook Islands, and New Zealand.

According to the petition, AST is currently a direct, wholly owned subsidiary of eLandia International Inc., which is an indirect subsidiary of Amper. Upon completion of AST’s acquisition, ATH will form a new U.S. HoldCo that will own 100% of AST’s member interest.

The petition includes background information on ATH, which it says is “experienced and financially sound holding company which owns several communications carriers that have a long and successful history of providing communications services to island-based markets in the South Pacific.”

Additionally, the Fiji-based ATH was incorporated as a public company in 1998 as a vehicle through which the Fiji government consolidated its investments in the telecommunications sector for the purpose of privatization and liberalization under Fiji’s public sector reform program. Among ATH’s wholly owned subsidiaries are Telecom Fiji, Fiji International Telecommunications Limited (FINTEL). ATH also has a wholly owned subsidiary in Kiribati.

“Consummation of the Proposed Transaction will allow ATH to leverage its considerable experience and expertise in serving island markets and AST’s record of innovation and infrastructure development to ensure innovation, investment, and a superior customer service experience for users in American Samoa,” the petition states.

Also cited in the petition is other information that has already been reported on by Samoa News — for example, 72.6% of ATH’s shares is held by the government owned Fiji National Provident Fund (FNPF). Background information on FNPF is also provided in the petition.

While the yet to be formed U.S. HoldCo will own all of AST’s member interest, the petition identifies “indirect owners of AST”, and they are ATH (which will hold 100% shares of U.S. HoldCo) FNPF, and the Fiji government.

The petitioners also request advance approval for indirect investment of more than 5% in AST for Unit Trust of Fiji Limited (UTOF) formed under the laws of Fiji, which currently holds approximately 4.64% of the shares of ATH, but which may want to increase its shares of ATH through open market purchases up to and including a non-controlling 25% interest.

UTOF was established in 1978 to provide an equal opportunity fund for creating wealth for ordinary Fijians and currently represents a wide range of investor individuals, clubs, associations, groups, corporations and institutions, the petition states.

The Samoa News
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